Venezuela’s interim President Delcy Rodríguez last week submitted a proposal to rewrite the country’s foundational oil law, a move that would mark a dramatic departure from the resource-nationalist framework established under late President Hugo Chávez. The draft legislation, seen by Reuters, suggests a sweeping shift toward a more investor-friendly model, granting private and foreign companies a level of control over production and revenue that has not existed in Venezuela for decades. Lawmakers in the National Assembly were scheduled to begin debate on the proposal on Thursday, a timetable that coincides with a landmark 50-million-barrel oil supply deal between Caracas and Washington earlier this month. The deal, negotiated after the U.S. capture of former President Nicolás Maduro, has heightened international focus on Venezuela’s oil sector and its potential reintegration into global markets.
The proposed reform is aimed at addressing long-standing demands from oil executives and potential investors, many of whom are aligned with Washington’s broader $100 billion reconstruction plan for Venezuela’s energy industry. For years, Venezuela’s oil sector has been constrained by Chávez-era nationalizations and expropriations that stripped companies of control and access to revenues, leaving many investors wary of returning. Under the new draft, companies would be able to operate oilfields under a new contract model, and—crucially—would be allowed to commercialize production and receive proceeds from sales directly, even when PDVSA holds a majority stake. This represents a fundamental change in how the Venezuelan oil economy would function, effectively reducing PDVSA’s historic grip on the sector.
A central component of the reform would allow the government to lower royalties from the current 33% rate to as low as 15% for special projects or those requiring significant investment. This change is designed to make Venezuela’s oil assets more financially attractive and competitive compared with other global producers. In addition, the draft introduces the option of independent arbitration to resolve disputes, a key demand from investors who have long criticized Venezuela’s legal environment for lacking predictable and impartial mechanisms for settling commercial conflicts. This could help restore confidence in a market where uncertainty has often deterred long-term commitments and capital flows.
Despite the potential economic benefits, the proposal is also likely to ignite political and legal controversy. Venezuela’s constitution reserves core oil activities for the state, and any reform that expands private operational control could face constitutional challenges and pushback from nationalist factions. Moreover, the broader legitimacy of the current interim government remains a contentious issue, complicating the legal certainty that investors seek before committing to major capital projects. Still, proponents argue that the reforms are necessary to revive an oil industry that has been severely underfunded and mismanaged for years, contributing to dramatic declines in production and a collapse in government revenue.
As debate in the National Assembly gets underway, the proposed hydrocarbons reform signals a potential turning point for Venezuela’s energy future. If enacted, it would represent one of the most significant policy shifts in the country’s modern history, reshaping the relationship between the state and private capital in an industry that has long been the backbone of the Venezuelan economy. The coming weeks will reveal whether Venezuela can translate this ambitious proposal into a durable framework that attracts investment, boosts production, and stabilizes a sector that has been at the center of the country’s economic and political turmoil.
